SFK Pulp to Implement Operational Excellence Program

Dec. 1, 2009 (Press release) - SFK Pulp Fund is announcing a plan to upgrade its activities in its mills located in Fairmont, Menominee and St-Felicien. The goal is to increase productivity in all operations through an employee training program as well as the improvement of its business processes.

Continuous Improvement
Market conditions and globalization have prompted companies to improve the quality of their products, while reducing their production costs and avoiding unnecessary waste. To achieve these objectives, SFK Pulp will gradually implement an operational excellence management model to optimize all of its activities. This business-critical approach to improve operational performance derived from the "Toyota" system will not only help the company react quickly to new market conditions, but also adapt to clients' needs and upcoming challenges, maximize its assets, which include its human capital, as well as secure new markets.

"Within this difficult business context, we are taking this opportunity to examine the effectiveness of our processes and from this point forward, undertake to modify our methods to become more competitive, flexible and efficient, thereby creating a more stimulating working environment for our employees", added Mr. Pierre Gabriel Cote, President and Chief Executive Officer.

Upgrade Plan
As part of this upgrade plan, employees will have access to various training programs, which will promote a greater acquisition of skills and a more effective knowledge transfer within the organization. Moreover, this upgrade plan includes the reassignment of 12 unionized employees of the Saint-Felicien mill, which will lead to an improved management of the workforce at the mill in the future, and the elimination of 42 non-unionized positions within the organization overall, of which 13 are eligible for retirement benefits. All terminated employees will receive various separation payments and be given access to a job transition program, at an overall cost of approximately $1.8 million. This upgrade should lead to annual savings of approximately $4 million.

About SFK Pulp
SFK Pulp produces and distributes high-quality virgin and recycled kraft pulp, operates three mills located in Saint-Felicien, Quebec, Fairmont, West Virginia, and in Menominee, Michigan. The SFK Pulp workforce totals a little over 500 employees. The company's annual production capacity reaches 745,000 metric tons.

The Saint-Felicien mill provides northern bleached softwood kraft pulp (product known as NBSK pulp) to various sectors of the paper industry in Canada, the United States and Europe, for use in the production of specialized products.

The Fairmont and Menominee mills manufacture air-dried recycled bleached kraft pulp (product known as RBK pulp) and primarily supply manufacturers of fine uncoated paper, household paper for commercial and industrial uses, and coated paper in the United States.


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